Tesla shares (NASDAQ:TSLA) plunged 10% on Thursday’s after-hours trading after the Securities and Exchange Commission filed charges against CEO Elon Musk over his now-infamous tweets last August 9, when he announced on Twitter that he was thinking of taking the company private at $420 per share, and that he had “funding secured.”
The SEC’s filing, which lists Musk as the Defendant, alleges that the CEO issued multiple statements on August 7 that were misleading and inaccurate. Apart from his “funding secured” tweet, the SEC also pointed out that Musk’s posts about all investors being able to stay with the company if it goes private, as well as investor support being confirmed, were equally inaccurate and misleading.
Following is a section of the SEC’s complaint surrounding Musk’s tweets.
“Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions. When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a “special purpose fund,” and had not confirmed support of Tesla’s investors for a potential going-private transaction.
“He also knew that he had not satisfied numerous additional contingencies, the resolution of which was highly uncertain, when he unequivocally declared, “Only reason why this is not certain is that it’s contingent on a shareholder vote.” Musk’s public statements and omissions created the misleading impression that taking Tesla private was subject only to Musk choosing to do so and a shareholder vote.”
By posting these announcements on Twitter, and considering the reaction of the market immediately following his updates, the SEC alleges that Elon Musk violated “and unless restrained and enjoined will violate again, Section 10(b) of the Securities Exchange Act of 1934.” The SEC ultimately requests the court to issue the following sanctions against Elon Musk.
- Permanently restraining and enjoining Defendant from, directly or indirectly, engaging in conduct in violation of Section 10(b) of the Exchange Act;
- Ordering Defendant to disgorge, with prejudgment interest, any ill-gotten gains received as a result of the violations alleged herein;
- Ordering Defendant to pay civil penalties pursuant to Section 21(d)(3) of the Exchange Act;
- Ordering that Defendant be prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act.
Tesla is yet to issue a statement about the SEC’s case against Elon Musk.
The SEC’s full complaint against the Tesla CEO can be read in full below.
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Wouldn't all the anti-Elon people think this is good news? If Elon gets replaced by somebody who is more capable than him, it is good for the company. But this news has made the stock go down, so it would seem that many investors think the company will fail without Elon at the helm. So SEC wants to remove the man almost everybody thinks can make the company a great success for the benefit of investors??? How is this possibly good for stockholders? I think the only relevant issue is did Elon or his friends profit from the announcement, and it would seem from my viewpoint that it is the shorts who have profited, not Elon.
Quite frankly, I have a hard time understanding why anyone would celebrate a company failing when the company is employing tens of thousands of people and producing products and services that are coveted and widely regarded as both cutting edge and excellent to the point where they can barely keep up with demand. I have nothing but contempt for these wealthy stock shorters who try to profit off of the failure of what is essentially the American dream. Screw those @ssholes.
I have issues with Elon. He's a brilliant entrepreneur, but he's also egotistical, prickly, and apparently can't let go of even the smallest slight. He needs to stop tweeting bullshit like the Pedo crap and whatever happens to cross his mind that day. So let him be the idea guy behind the scenes and bring in a COO to manage the day-to-day. But don't take it out on the company, its fantastic, groundbreaking products, and its employees and stockholders. That's just petty and ignorant.
SEC : "Woooow that's a FRAUD ! Because of you poor littles shorts lost their money, how dare you ?! Only those poor shorts can manipulate the price, not you, even with a 《nothing concrete》"
The SEC charge (overreach) asking for barring has hurt Shareholders FAR farm more than the tweet did to shorts or anyone else. And will continue to do so. SEC is tasked with protecting shareholders and in this case are ignoring 'Do No Harm' - no further harm to investors. Their attempt to take down Elon is basically taking down Tesla and millions of stockholders. They are materially harming the very people they purport to protect.
Just want to re-enforce, want to put 1000 likes for best post!
Also, the guys claiming this as a stock manipulation are short-selling with the intent of manipulating the stock.
Musk has a desk calendar from when this incident allegedly occurred and it clearly shows he is innocent. /s
On a more serious note, I bet one of the billionaire investors out there who is one of the major Tesla shorts is calling in a favor with a political appointee at the SEC, and Musk, unfortunately, left the door wide open for something like this.
Turns out, communicating your every thought to the entire internet via Twitter is not always a great idea. Who knew?!?
Also, the guys claiming this as a stock manipulation are short-selling with the intent of manipulating the stock.[/QUOTE]
Amen, brother. I read it the same way. Musk has sone powerful enemies. He has had to battle for each of his companies against the status quo. Everything that he says is taken as gospel. Some are fans and in the case of the people behind this SEC case, just plain idiots. He 8s not responsible for foolish idiots, in a stock market, adding words to his statements and jumping the gun so to speak. Hell, if I walked into a bank and said "I am thinking about taking out a loan for a vehicle." The bank would say take this application, fill it out and when you make a decision bring it back. Which is how Musk's statement should've been taken. Yhe SEC should've reviewed his statement, explained that he made no final decision on it yet and moved on. They were fools for not doing so.
